Pivotal Research analyst Jeffrey Wlodarczak double downgraded Netflix to Sell from Buy with a price target of $235, down from $550. The analyst calls last night’s Q1 subscriber miss and weak subscriber financial guidance “shocking.” He reduced subscriber forecasts and pushed back his profitability forecasts substantially, which led to the nearly 60% reduction in the firm’s target price. Wlodarczak views Netflix considering an ad supported cheaper version as a net negative, saying it “cheapens the brand” and the product versus the “current great consumer experience and introduces ad volatility to results.” From a stock perspective in a period of rising interest rates, pushing pack profitability materially “is likely to not be welcomed by the investment community,” Wlodarczak tells investors in a research note.
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